Future Looks Golden for Laser Disc Revival

The laser disc, once thought to be headed for extinction, is coming back.

In the last two years, it has finally started to establish a niche in a rentals and sales market dominated by videocassette. Image Entertainment, the biggest laser disc distributor, reported that revenues were up 169% during the last fiscal year. At Pioneer LDCA Inc., the second largest distributor, sales are up 20% in the first six months of the year.

Last year, Image Entertainment president Martin Greenwald said, about 1 million discs were sold in the United States, at a cost of between $25 and $40 each. The projection for this year is 1.5 million.

The laser disc is basically a big version of the compact disc, which has revolutionized the recording industry by “reading” discs by laser rather than by needle. Using the same technology, the 12-inch laser disc--primarily used to market movies--produces both sound and picture when played on a special machine.

The big selling point of laser disc is both audio and video excellence with almost no reduction in quality after extensive use.

Its competitor, the VHS videocassette, offers sound and picture considerably inferior. Not only that, the audio-video quality of cassettes drops off considerably with use. In lines per screen--a measurement of picture clarity--the laser format provides 420 lines, while the cassette format is capable of roughly half as many.

Though growing rapidly, the laser disc market is still small. Industry analysts report only 300,000 households with laser disc machines and just 3,500 titles on the market. Videocassette recorders aren’t much older than the disc machines but proved much more popular because they were cheaper and had the ability both to play prerecorded material and to tape programs off the air, while the laser disc can only be used for playback.

In the next few years, however, laser discs may make a big move on videocassettes, since that market’s growth has finally slowed as it nears the point of saturation. VCRs are in about 65% of the nation’s homes (compared to 0.33% for disc machines).

“With all the emphasis on home-video growth in the mid ‘80s, it was the wrong time for a competing format like laser discs to get much attention,” Greenwald said. “But now that the novelty of videocassette has worn off, some people are looking for something new.”

The growing interest in the laser disc is largely a by-product of the CD explosion. Pioneer’s introduction in 1985 of the combination machine--which plays both CDs and laser discs--started the trend.

“People who were buying CD players decided that they would spend a little more on a machine that also plays video discs,” Greenwald said. “People who buy the combination players are into CDs first and laser discs second. But it’s still a boost to the laser disc market.”

Also, the popularity of the CD has made it easier for consumers to adapt to the laser disc.

“If CDs weren’t around, consumers would know nothing about discs that are played by a laser beam,” Greenwald said. “But CDs laid the groundwork. People are impressed by CD quality sound. They know what a CD is. We didn’t have to do this big consumer education process. It’s easy for them to figure out that a laser disc is just a big CD that gives you a picture along with the sound.”

The laser disc is still more expensive than the VCR. Though some are available at discount prices of about $500, most cost several hundred more. On the other hand, the discs are cheaper to buy than most films in their initial home video release, which usually are in the $80-$90 range due to the economics of a home-video business that’s largely based on rentals.

At the moment, the laser disc industry is geared to sales. “It’s about 90% sales to about 10% rentals,” Greenwald said. “But in a few years, it will be 50-50.”

Availability of laser disc titles is still a problem. “Right now many of the classics aren’t on laser,” said Meir Hed, whose small Videotheque chain stocks laser discs. “If there were more titles, laser disc would be more attractive to consumers.”

Though most major new titles are released on laser disc, they often aren’t available until weeks after they’re out on videocassette. “That hurts the market too,” Hed pointed out. “If movies came out on laser discs the same time as cassettes, it would really boost the laser disc market.

“Still, it’s much better than it was. The release dates used to be indefinite--or maybe within a month of the videocassette release. Now some do come out closer to the time of the videocassette release or at the same time.”

Image’s Greenwald explained why some home-video companies are leery of putting out movies on laser disc and cassette simultaneously:

“They’re afraid of piracy. Video retailers can make copies off of laser disc--much better copies than you can get copying another videocassette. Putting out the laser disc a few weeks later cuts down on the piracy.

“There’s no copy guard yet available to prevent copying laser discs. One’s being worked on now but it’s hard to say when it will be perfected.”

Industry analysts agree, however, that the next big step needed to fuel laser disc growth will be reduction in price of the machines--to the $300 range that’s affordable to the masses.

“Right now, laser disc is an upscale item,” Hed said. “People who like the best of everything and can afford to pay for it are into laser discs. It will stay that way until the prices of the machines drop.”

Pioneer is coming out with a laser disc-only player next month that will sell for $500. But that’s not an indication of a general price-reduction of machines.

When can such a drop be expected?

“Not any time soon,” replied Ned Nomura, Sony’s national marketing manager. “These machines are very complicated. It costs a lot to make them. I won’t say when they’ll be available at a much lower cost.”

But Greenwald was willing to make a prediction:

“We’re a couple of years away from the big boom in laser discs. That’s when all the pieces will fall into place.”